Hispanics and Asians in America are more likely to be online at home than Caucasians and African-Americans, according to a study by Insight Research, and over the next five years their Internet penetration rates will grow several times faster than the rest of the population.
Insight’s report, “Web Portals, ISPs, IP Telephony and the Ethnic Consumer: Bridging the Digital Divide,” found that the rapidly growing ethnic population represents a substantial opportunity for ISPs and Web portals that can attract these consumers with in-language, in-culture messages, and specialized content. By 2005, Insight predicts U.S. ethnic groups will spend $3.1 billion on Internet access, an amount nearly equal to the $3.3 billion total U.S. Internet access market in the year 2000.
“This is not to say targeting ethnic communities is a sure-fire bet,” said Insight president Robert Rosenberg. “If Web portals are too narrowly focused, overdeveloped, and undifferentiated from their competitors, they too can fail. But when ethnic sites go beyond in-language translations and move in the direction of cultural interest to address the special communities they serve, they have the potential to induce a loyalty not usually associated with more generic Web sites.”
Content is not the only area where opportunities exist in the ethnic market. A survey of 1,000 U.S. households by Vertis examined holiday shopping trends by age and income, and found the greatest year-over-year gains in Internet usage for holiday shopping were recorded in households with annual incomes less than $30,000, where 63 percent of households did more Internet shopping. Similar increases were measured among adults age 55 to 75 and African Americans.
“The gains we’re seeing in these demographic segments should encourage retail marketers to target these underserved markets,” said Douglas Raymond, CEO of the Retail Advertising and Marketing Association.
Hispanics, in particular, have seen significant increases in household computer penetration. According to the “Digital World and the U.S. Hispanic II” study by Cheskin Research computer penetration among Hispanic households increased from 42.3 percent in the first quarter of 2000 to nearly 47 percent in the fourth quarter. The rate of growth of Hispanic household technology penetration over the last two years is 80 percent compared to 21 percent for the overall market.
“Perceived expense” is the greatest barrier to computer ownership among Hispanics, according to Cheskin, while “lack of information” also ranks high. No single computer brand has a hold on the Hispanic market: more than 70 percent of current non-owners have no brand in mind for future purchase, and that has changed very little in the past eight months.
Like the Insight study, Cheskin also sees an opportunity for content players in the Hispanic market as more Spanish-dominant consumers go online. Hispanic users continue to prefer mainstream portals, and Yahoo has increased its lead as the primary portal for U.S. Hispanics using English.
A slight decrease in online purchasing and intent to purchase online found by Cheskin when comparing its most recent study to a previous study from April 2000, is likely tied to a decrease in Internet trust that has developed over the eight months. The lack of trust may be fueled by media coverage of payment and fulfillment problems.
“This study clearly shows that the U.S. Hispanic market has an overwhelmingly strong desire to be a part of the digital age,” said Felipe Korzenny, principal of Cheskin Research. “Given this market’s unique socio-political characteristics, companies have a great opportunity to educate and tap into the needs of Hispanics in the U.S. As the general market reaches a saturation point of computer ownership, it makes sense for companies to explore the growing Hispanic market.”